David Khun, AVP and Head of Emerging Technologies at ValueMomementum

GenAI is pushing a lot of insurers to set up new centers of innovation right. So they’re creating AI centers of excellence and things like that to help manage this process. There’s a couple of challenges with that though. AI is only one aspect of automation and really what we’re trying to do in most of the emerging tech space is automate. And the question is what is the most profitable thing to automate? And sometimes it’s a cost reduction — what you really look at that as profit.

When you look at some of those areas you have to look internally at do you have the right skill sets right? So do I have what I need as a carrier to understand and execute on these places? And the other piece is insurers are very risk averse and so we have a lot of people in business and IT yelling we need to do Gen AI, we need to do generative AI. The majority of the cases that you read about for generative AI are not actually generative AI — they fall in a whole bunch of categories of AI. But the really good part is there’s a new wave of AI coming along and it’s being pushed because of generative AI.

The challenges with Gen AI is it’s a black box. So even the companies that are making these models do not understand how they are getting to the results they’re getting. Data risks are always going to be a challenge when we open up the door for any new technology. GenAI opens up a whole different place and so people need to be cautious and understand what data they’re passing through, what data is being captured and ultimately where the data is coming from that is training some of these models.

The other piece is people get really comfortable with AI and we stop thinking about I should be treating this as like a junior level person and second guessing everything they say and so people start taking that as truth and putting it out as reality. And those are the places where we’re seeing some issues and some companies outside of insurance have actually shut off access because data leakage and all sorts of other stuff has happened. And so when we look at GenAI hallucinations, privacy, IP — all of those things start popping up and really you need to understand how that whole ecosystem really survives going forward and don’t just jump into the pool. Start in the kiddie pool and start walking in that end as you bring your security team and your compliance team — all those people along.